Does Active Directory Lightweight Directory Services support account lockout like how the full Active Directory domain services does?
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By default, AD LDS supports and enforces the password policy settings and account lockout settings that are provided by Windows Server 2008, including the following:
Minimum age
Maximum age
Complexity
History
Too many failed logon attempts
Disabling and enabling of accounts
If the server on which AD LDS is running belongs to a workgroup, the server's local password policy settings and account lockout settings are implemented. If the server on which AD LDS is running belongs to a domain, the password policy settings and account lockout settings from Active Directory Domain Services (AD DS) are implemented
.
From this site - technet.microsoft.com/en-us/library/cc731012(v=ws.10).aspx

Christopher
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And if you set a policy to be applied locally on a domain machine, it will take over. No need to lower the domain wide policy to accomodate AD-LDS users (which might have other needs). – ixe013 Sep 24 '12 at 18:50